Italian government under fire over hostage deal

ROME (Reuters) - Prime Minister Romano Prodi is facing criticism at home and abroad after a deal with the Taliban to free an Italian reporter kidnapped in Afghanistan.

The United States and Britain have denounced the deal, in which five Taliban were exchanged for the journalist this week, and on Thursday Italy's opposition threatened to withdraw its support for Italian peacekeepers in Afghanistan.

That support is crucial for Prodi ahead of a March 27 vote on the mission in the Senate, where he has a tiny majority. He had to resign briefly last month after a revolt by leftist and pacifist allies, partly over the presence of Italians alongside U.S., British and other Western allies' troops in Afghanistan.

"By now we are regarded as unreliable by our allies," said former prime minister Silvio Berlusconi, a staunch U.S. ally. "(President George W.) Bush trusted me. It's not the same now".

Berlusconi's own government was accused by critics of paying cash to free Italian hostages in Iraq between 2004 and 2005. But Gianfranco Fini, foreign minister under Berlusconi, said no foreign ally had blamed Rome in past hostage crises.

"Italy has lost all international credibility," Fini said, adding that Italy's 1,900 soldiers in Afghanistan, who are not involved in a large-scale NATO offensive in the south, were ill-equipped to deal with the recent escalation of violence.

"The situation on the ground in Afghanistan has completely changed and our vote on the refinancing of the Italian mission should not be taken for granted any longer," he said.

"WRONG MESSAGE"

A senior U.S. administration official said on Wednesday Washington had formally complained to Rome about the prisoner swap to free journalist Daniele Mastrogiacomo.

Italy sought to play down the rift and Foreign Minister Massimo D'Alema phoned his U.S. counterpart Condoleezza Rice on Thursday to clear the air.

The State Department gave no details of their conversation but said during the kidnapping, Washington had stressed to Italy its long-standing view that it does not support "hostage exchanges or other concessions to terrorists."

"Given the increased threat created for all of us who have people on the ground in places like Afghanistan, we expect that concessions will not be made in the future," State Department spokesman Sean McCormack said in a statement.

But the statement added that Italy remained an important partner with whom the U.S. shared positive bilateral ties.

Britain also said it was concerned that the deal, authorized by Afghan President Hamid Karzai, "sent the wrong message to prospective hostage-takers".

Prodi has said Rome only wanted to save Mastrogiacomo's life. The reporter, kidnapped on March 5, was freed on Monday. His Afghan driver was beheaded by the kidnappers and the whereabouts of his interpreter remain unclear.

D'Alema also said he did "not regret in the least" the efforts to save the reporter's life and that there had been no breakdown in relations with the United States.

"It is preferable to have controversy over the fact that we saved him, rather than the one we would have had if we had let him die," he told Italian television, ANSA news agency reported.